LOREAL_Registration_Document_2017

2017 Consolidated Financial Statements* NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4.6.

Accounting principles

Derivatives and exposure to market risks

NOTE 1

NOTE 9

229

261

Main events of the period

Equity – Earnings per share NOTE 10

NOTE 2

230

265

Operating items – Segment information

Provisions for liabilities and charges – NOTE 11

NOTE 3

233

Contingent liabilities and material ongoing disputes

Other operational income and expenses

NOTE 4

239

270

Number of employees, personnel costs

NOTE 5

Off-balance sheet commitments NOTE 12

273

and employee benefits

240

Transactions with related parties NOTE 13 274 Fees accruing to auditors and members of their NOTE 14 networks payable by the Group 275 Subsequent events NOTE 15 276

4

Income tax

NOTE 6

247

Intangible assets

NOTE 7

249

Financial assets and liabilities – Cost of debt

NOTE 8

257

Accounting principles

NOTE 1

IFRS 16 “Leases” applicable at 1 January 2019. The Group s has completed the lease-identification stage and is now working on simulating the impact that the application of this standard will have on its financial statements. The processing of data and the calculation of the impact this standard will have on the Group's financial statements will be carried out by a specific information system that will make it possible to generate the associated accounting entries. The Group is not concerned by the new standards or the new amendments to the standards published and effective as of 1 January 2017, except for the amendment to IAS 7 “Information disclosure requirements”, effective as of 1 January 2017. Note 8 to the financial statements has been amended accordingly. Use of estimates 1.1. The preparation of the consolidated financial statements in accordance with international accounting standards requires that the Group make a certain number of estimates and assumptions that may affect the value of the Group’s assets, liabilities, equity and net profit (loss). These estimates and assumptions mainly concern the measurement of goodwill and other intangible assets, provisions, pension obligations, deferred taxes and share-based payment. Estimates used by the Group in relation to these different areas are made on the basis of information available at the date the accounts are prepared and described in detail in each specific associated note.

The consolidated financial statements of L’Oréal and its subsidiaries (“the Group”) published for 2017, have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted in the European Union as of 31 December 2017. On 8 February 2018, the Board of Directors closed the consolidated financial statements at 31 December 2017. The financial statements will not become final until they have been approved by the Annual General Meeting of shareholders to be held on 17 April 2018. The Group did not early adopt any standards or interpretations not mandatorily applicable in 2017. The Group may be concerned by the following standards: IFRS 15 “Revenue from contracts with customers” applicable as s of 1 January 2018. The Group has not identified any principles already applied that could be called into questions; IFRS 9 “Financial Instruments” applicable as from 1 January s 2018, the Group is primarily concerned by: the change in the accounting treatment of investments • and their remeasurement through profit or loss or through equity not reclassifiable to profit or loss under the fair value option. The shares concerned relate mainly to the Group’s investment in Sanofi; the possibility of deferring recognition of the time value of • currency options in equity in the same way as for forward hedges, so as to only impact income at the date the hedged transactions occur. The impact of the change in accounting method over full-year 2017 is not material;

REGISTRATION DOCUMENT / L'ORÉAL 2017

229